A Decade of Resilience: Bhutan and the World Bank Forge a Model Partnership on Climate and Disaster Risk Management

In February 2025, with the signing of a US$40 million IDA Climate and Disaster Resilience Development Policy Financing with a Catastrophe Deferred Drawdown Option (Cat DDO), Bhutan took another major step toward fortifying its climate and disaster resilience. This innovative financial instrument provides Bhutan with immediate access to funds following natural disasters or health emergencies—a lifeline in times of crisis.

This is Bhutan’s second Cat DDO. The first, a US$15 million operation approved in 2020, helped the country swiftly manage the COVID-19 pandemic. Together, these operations symbolize Bhutan’s deepening commitment to proactive risk management and mark a new milestone in a decade-long partnership with the World Bank.

Navigating Complexity: Reforming Through Crises

Over the past decade, Bhutan has faced a convergence of crises: severe flooding, increasing glacial lake outburst flood risks, and persistent earthquake threats. Meanwhile, a wave of emigration—more than 64,000 people or 9% of the population—has strained Bhutan’s technical capacity across key sectors.

Despite these pressures, Bhutan has remained focused. Its 13th Five Year Plan prioritizes building national resilience, and it has made steady progress integrating disaster and climate risk management across institutions and infrastructure.

A Partnership for Systems Transformation

Through the Strengthening Risk Information for Resilience in Bhutan project financed by the Climate Investment Funds (CIF) and the Global Facility for Disaster Reduction and Recovery (GFDRR), including the Japan-World Bank Program for Mainstreaming Disaster Risk Management in Developing Countries, the World Bank has supported Bhutan on multiple reforms led by the Ministry of Infrastructure and Transport (MoIT), the National Center for Hydrology and Meteorology, the Department of Local Governance and Disaster Management under the Ministry of Home Affairs, and the Property Assessment and Valuation Agency under the Ministry of Finance:

1. Integrating Resilience into Infrastructure and the Built Environment

2. Strengthening Emergency Preparedness and Financial Resilience

Additionally, the World Bank and GFDRR have provided recommendations to improve the following reforms that are being finalized by the respective government agency: the National Aviation Policy and the National Surface Transport Policy by the MoIT, revision of the Standard Operating Procedures for Telecommunication Services During Disasters in Bhutan by the Government Technology Agency, and draft amendments of the National Disaster Management Act by the Ministry of Home Affairs.

With financial support from GFDRR, a World Bank-led Crisis Preparedness Gap Analysis in 2024 identified critical areas for reform and informed the design of the latest Cat DDO.

These reforms reflect a shift from reactive response to proactive planning—moving Bhutan closer to a whole-of-government resilience strategy.

More Than Financing: A Model for Long-Term Reform

What sets Bhutan apart is not just its uptake of financial instruments like the Cat DDO, but its commitment to embedding resilience in policy, planning, and practice. These efforts are not one-off reforms—they are part of a long-term, evolving architecture of resilience.

“This partnership is about more than access to funds—it’s about building the systems, institutions, and culture that allow a country to withstand shocks and continue to grow,” said Cecile Fruman, World Bank Acting Country Director for Bhutan.

A Vision for the Next Decade

As climate risks intensify, Bhutan’s experience offers lessons for other small and vulnerable states. It shows how sustained commitment, paired with strategic partnerships, can create a resilient development trajectory.

The World Bank, GFDRR, and CIF remain committed to supporting Bhutan in this journey. Together, we are not only financing resilience—we are co-creating a blueprint for future-ready nations.